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Wednesday, December 14, 2016

Daily update 12/14 Industriall production (IP)

Rate hike as expected, but Yellen snuck in an extra potential hike for next year.

That was a little different reaction then there was to the last rate hike which saw strong buying after the announcement.  As mentioned last night the market was in a much different position this time.  Breadth was -78%.  New highs dropped again down to 99.  A weak day to say the least.

The futures are still above the 20 SMA.  The ADX line has rolled over from a high level.  Usually that indicates some consolidation/pullback. 

The green count dropped under 50.  That was a pretty big tumble. 

The short term bull pressure line took a pretty good hit.  All time frames are still positively crossed for now.

It is common for the market to do the opposite of what it does on FED day the next day.  The futures are up a bit as I write this so maybe that happens again.  If we end up down again or we get a weak bounce then we could be in pullback mode.  It has been quite some time since we touched the 20 DMA.  A pullback to there should happen soon anyway.  Maybe today started that move.

The latest IP data was well below consensus.

IP has fallen 3 of the last 4 months while the pundits are whooping it up about a strengthening economy.  The reality is there was an uptick in late spring and early summer, but it has been weakening since July.  We know there will be production cuts coming in Jan. from GM.  MoM auto sales for Nov. were -.5% which won't help any.  It seems likely IP will fall further early next year.  Lets take a look at the long history of this data.

Clicking on the chart will make it bigger.  In almost 100 years of data IP has never turned down this long without a U.S. recession.  Currently there is no sign the economy is strengthening.  If this data is telling us anything it is that the economy may be slowing down a bit again.


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The information in this blog is provided for educational purposes only and is not to be construed as investment advice.